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Vijay Ramnathan is the president of MineralTree, a company specializing in AP and payment automation for middle-market and enterprise-level companies. A self-professed fintech and payments geek, Vijay has spent over 20 years in the space including strategic leadership and operational roles at companies including US Bank, Fifth Third Bank, and COMDATA/Fleetcor.
Dental practices can use examples of digitized workflows to streamline business functions through accounts payable.
2020 was a year of great uncertainty for dental providers. The COVID-19 pandemic shuttered offices for weeks and months. Meanwhile, back-office employees worked remotely to keep up with the practice’s finances, and for those offices still relying on paper invoices, paper checks, and manual inputs, it was extremely difficult.
Today, dental practices have returned to some semblance of normalcy, but many are still paying the price for the dramatic loss in revenue caused by the pandemic. According to a survey by the ADA Health Policy Institute in early 2021, patient volume was estimated at 80% of pre-COVID-19 levels, and staffing in dental offices was back at 99% of pre-COVID-19 levels. On the flipside, the survey reveals some difficult decisions required to recover financially, including raising fees, taking out new loans, reducing dental team hours, and changing suppliers.
As they look ahead, dental practices are reshaping their back offices to protect them from the kind of operational disruptions created by the pandemic. For many, even the most basic business functions like receiving invoices and paying bills were a challenge. Pre-pandemic, nearly 90% of small/medium healthcare entities still received paper invoices and utilized manual invoice data entry, according to a report from Level Research. The pandemic has changed that dramatically.
Until now, most dental practices did not believe digital solutions for paying invoices were a high priority. But the reality is that the back-office operations in these organizations have quietly struggled with manual processes for years. Slow patient payments negatively impact cash flow. Manual approval processes and paper checks create more work for short staff and limit the visibility into cash positions and control of spending. Many smaller practices also depend on their vendors for essential supplies and materials, so on-time payments are critical to maintaining these relationships.
Today, many dental practices are taking a serious look at their options for automating back-office functions like accounts payable (AP). Here’s why.
Streamlined Invoice Capture
Without AP automation tools, capturing an invoice is a manual process which involves opening mail, scanning, and/or printing the invoice and forwarding it to the appropriate person to approve it. AP automation solutions enable dental providers to automatically capture any invoice in digital form and check for duplicates in the system, saving time and manual effort, and eliminating entry errors and other unnecessary headaches. By digitizing the invoice information, they can also make more accurate spending forecasts and improve their long-term financial planning via easy historical and anticipated spend reporting.
Goodbye Paper Checks and Fraud Exposure
The pure logistical challenges of multiple people handling, approving, signing and mailing out paper checks, not to mention the additional costs and lack of control over cash flow, put paper checks and the manual processes that go with them, on their way to extinction.
Paper checks are also the leading payment method associated with fraud, according to the 2020 AFP Payments Fraud and Control Survey. 74% of finance professionals report that their check payments were targets of attempted and/or actual payments fraud. AP automation and electronic payments can minimize the chances of invoice fraud and phishing attacks.
Hello Virtual Card Payments and Rebates
With constant cost pressures and thin margins, dental providers can’t afford to turn away opportunities to save and make money through early payment discounts and virtual card rebates. Virtual payment cards are unique 16-digit numbers created solely for a single-use transaction. Payments can be made from anywhere and they are highly secure for both payer and payee. Compared to the 74% of finance professionals referenced above that reported check fraud, just 3% reported fraud related to virtual cards.
Aside from the security benefits, virtual cards have also become widely accepted, making them as convenient as any other payment form. And businesses that use the cards can take advantage of valuable rebates to generate extra cash, offsetting other software subscriptions fees or funding new projects for the business.
Audit Pain Relief
Audits can be a messy situation for even the best finance teams. Auditors need copies of invoices, checks, reports, and other information, which can be especially cumbersome when they are in paper form. The ability to digitize that information makes the audit process simpler and cleaner for all involved. Auditors get easy access to everything they need, and finance teams spend minimal time and effort around the audit.
Across the dental industry, digital has taken on a new sense of urgency to improve and streamline the delivery of patient care. That same thinking needs to be put on the back-office financial operations as well. Automating foundational processes like accounts payable can deliver dramatic benefits to dental practices, especially small and mid-size entities that have limited staff and budgets.